Recovery Begins in Michigan Town Burned by Manufacturing Losses

After losing his truck-driving job
in 2009, Anthony Gonzalez wondered whether he’d ever find work
near Jackson, Michigan, where he’s lived all his 38 years.

In January, after a welding class, he landed a $12-an-hour
position at Midbrook Inc. making industrial cleaning machines.
He’s been working 10-hour days, six days a week.

“I was relieved, happy,” Gonzalez said in a telephone
interview. “Finally, someone wanted to bring you in the door.”

The newly minted welder is benefiting from a Michigan
economy at its strongest since 2006. It’s fueled by automobile
sales and outpacing California, Texas, Florida and Arizona,
according to a March report by Dallas-based Comerica Bank.
Jackson, a city of 33,500 that’s hub of a region with 300
manufacturers and neighbor to the 125,000-seat Michigan
International Speedway, embodies the state’s experience.

Jackson, which is 70 miles (112 kilometers) west of
Detroit, led the U.S. with a 2.2 percent point decrease in
unemployment for the year ending in February, according to the
U.S. Bureau of Labor Statistics. The region has produced about
1,000 manufacturing jobs since February 2010, according to the
agency.

Still, the city’s finances have been hit hard by falling
property values and a decade of unemployment that exceeded the
U.S. average.

Welders Wanted

The 2009 federal bailout of Michigan-based General Motors
Co. (GM) and Chrysler Group LLC generated jobs throughout the state;
in 2011, U.S. auto sales were the best in three years.

By February, Michigan’s unemployment rate dropped to 8.8
percent, the first time it’s fallen below 9 percent since
September 2008. The U.S. unemployment rate that month was 8.3
percent.

From 2000 to 2009, Michigan lost 860,000 positions. It
gained 121,600 since 2010, including jobs in manufacturing,
business and professional services and health, according to an
April 6 report by the Research Seminar in Quantitative Economics
at the University of Michigan in Ann Arbor.

The Jackson region’s manufacturers range from auto
suppliers to makers of aerospace and medical equipment. The
median household income of $46,117 is below the statewide
average of $48,432.

The region had 8,200 manufacturing jobs in February, up
from 7,200 a year before, according to the state Technology,
Management and Budget Department. In 1995, it had 13,000.

“I know companies that need 25 welders now,” said Bill
Rayl, executive director of the Jackson Area Manufacturers
Association. Also in demand are programmers for computerized
tooling machines, he said.

Valueless Property

The jobs for workers such as Gonzalez helped Jackson see
its income-tax revenue increase to $7 million in fiscal 2011
from $6.5 million in the previous year, Shaffer said. It was the
first increase since fiscal 2008.

Still, property values have fallen 30.2 percent and the
city lost 7.7 percent of its population since 2000, leaving at
least 1,000 vacant houses, Mayor Marty Griffin said.

Toy-store owner Phil Wrzesinski said his house is worth
less now than when he bought it nine years ago, despite
renovations.

“One house on my street was bought for $197,000 a few
years ago,” he said. “It was foreclosed and sold for
$87,000.”

There are bright spots: Griffin, 49, said he was elated
when the the assessment on his 1,100-square-foot home was raised
$800 this year, after five years of declines. It’s now worth
what he paid for it 23 years ago, Griffin said.

Budget cuts have trimmed the municipal work force to 214
from 330 in the past three years, City Manager Larry Shaffer
said. Since 2007, Jackson’s police force was reduced to 47
officers from 67, said Chief Matthew Heins.

One-Trick Pony

Michigan cities are hobbled by dependency on manufacturing,
said Lou Glazer, president of Michigan Future, an Ann Arbor-
based think tank that promotes a more educated work force.

“Michigan is too concentrated on a declining factory-based
economy, and that is a path to lower incomes and slower
employment growth,” he said. “We’re going to a very bifurcated
economy in Michigan, with a shortage of people with high
knowledge skills and an oversupply of people with low skills.”

Glazer defines knowledge-based companies as having 30
percent or more of their employees with four-year college
degrees. In Jackson County, 17.5 percent of adults ages 25 and
up had at least a four-year degree, compared with a national
average of 30 percent, according to the 2010 U.S. Census.

They’ll Take ’Em

The Jackson economy lost many low-skill manufacturing
positions over the years, yet gained more skilled ones in
engineering, prototype design and computerized machine
operators, Rayl said.

Tool-and-die companies have as much work as they can
handle, said John J. Basso, 58, president of Diversified Tooling
Group.

Basso said he’s “buried in work” after the longest
recession since the Depression. “If you have anything to do
with the auto industry today, you are very, very busy,” he said
in an interview at American Tooling Center.

Basso said his four companies had 132 employees in 2009,
when he said orders from automakers virtually stopped. He said
he’s hired about 60 people in the past six months, and now
Diversified Tooling employs 320.

“These are good-paying jobs, and a lot of overtime,”
ranging from $20 to $25 an hour, he said.

Basso said he abides by words of his late father, John
Basso, an Italian immigrant who started the company in 1972.

“He said you take a raw material, you process it, build a
product and you’re building value for the country,” Basso said.
“You can’t build value in the service industry, you do it in
manufacturing plants like this.”